Casinos to cannabis: Native Americans move into pot business

UKIAH, Calif. (Reuters) - A damp plot of bright green grass next to a Native American greenhouse in northern California doesn’t look like much, but it could soon set the burgeoning marijuana industry on fire.

Signs are seen at an entrance to a field on land owned by the 250-member Pinoleville Pomo Nation in Ukiah, California January 23, 2015. REUTERS/Robert Galbraith

An initial, 10,000-square-foot state-of-the art greenhouse is due to be erected within weeks on the land in Ukiah owned by the 250-member Pinoleville Pomo Nation, about 140 miles north of Sacramento. It’s the initial phase of a joint marijuana production and processing venture believed to be the first of its kind in the nation.

The endeavor, launched after a U.S. Department of Justice memo largely cleared the way for such enterprises, is expected to trigger similar ventures to bring cannabis cash to Native Americans, like the windfalls from tribal casinos and tax-free cigarettes sales.

But the new opportunity has sparked controversy as tribes struggle with concerns about historically high rates of substance abuse.

“It’s going to be up to each Indian nation to decide whether this is a tremendous economic opportunity or something to be feared,” said lawyer Robert Odawi Porter, an expert on tribal law and former president of the Seneca Nation of New York. “But one thing is certain. Everyone is talking about it.”

“Alcohol has ravaged Indian communities. It stares us in the face every day,” said Porter. “Now we’ve got to carefully examine the impact of marijuana.”

Pomo tribal leaders are cautiously optimistic about their venture with FoxBarry Farms of Kansas and the United Cannabis Corp (UCANN), of Colorado. They want to avoid a clash with law enforcement or neighbors, but are eager for a new source of income and support medical marijuana.

“We have a history of using plants for medicine,” Pomo Tribal Council Vice Chairwoman Angela James told Reuters. “The tribe is seeking economic development, and we’re comfortable with these partners and this product.”

Pomo’s marijuana plants will be used in UCANN-branded medicinal pot products from pills to “sublinguals” — tinctures applied under the tongue to address problems from insomnia to chronic pain.

Planting at the greenhouse is expected in early spring but the partners have declined to say how much cannabis will be produced. The greenhouse complex will eventually occupy 2.5 acres, with 10 extra acres available for offices and processing. The venture will employ up to 100 workers.

FoxBarry and United Cannabis plan to launch two other tribal operations in California but have declined to identify the tribes. Publicly traded UCANN aims to advance the use of cannabinoids in medicine, while economic development firm FoxBarry, which is investing $30 million in the three ventures, works with Native American governments across the nation.

RISK OR REWARD?

The Affiliated Tribes of Northwest Indians, representing nearly 50 tribes but not Pomo, passed a resolution last year opposing legalization of marijuana, citing its “threat to the health and safety of all tribes, especially our youth.”

However, interest has exploded since a DOJ memo in December signaled that tribes would be treated the same as states that legalize marijuana for medicinal or recreational use.

Porter, the trial law expert, and lawyers from the Harris Moure law firm in Seattle, which has a cannabis legal division, are sponsoring a conference this month in Washington state for Native American leaders to explore all aspects of marijuana enterprises from the economic benefits to the social impact.

Officials won’t “prioritize” enforcing federal marijuana laws, the DOJ memo stated, as long as conditions are met, including barring distribution to minors.

The memo indicates that a tribe can choose to legalize marijuana even within states where it’s illegal, but would be barred from distributing pot beyond its own territory.

U.S. Attorney Brendan Johnson, whose district includes nine tribes in South Dakota, says leaders have contacted him on a range of issues, including the risks of federal prosecution. “Others want to keep marijuana off their lands,” Johnson told Reuters.

The Cherokee Nation in Oklahoma has no interest in getting into the business, said spokeswoman Amanda Clinton. But the Fort Peck Assiniboine and Sioux Tribes of Montana, and the Red Lake Band of Chippewas in Minnesota, have begun feasibility studies.

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One of the most dramatic splits is in Washington, which began sales of recreational marijuana in 2014.

Washington state’s 1,200-member Suquamish tribe last year notified authorities it was considering the production and sale of marijuana. The tribe “has a responsibility to explore business opportunities that may help raise funds,” Suquamish Chairman Leonard Forsman said in a statement.

But the state’s 10,000-member Yakama tribe has outlawed marijuana on its 1.2 million acres, and wants it banned from 10.2 million acres of ancestral land that it ceded to the federal government.